Binance Wash trading behind huge Bitcoin volume increase, incentives are removed, says CZ
Removal of some trading fees on the major crypto exchange Binance is believed to be the reason behind an increase in trading volume on Friday which ended up barely moving the price at all. Binance CEO Changpeng Zhao (CZ) has now announced steps to combat so-called wash trading on his stock exchange.
In particular, the increase in volume occurred on the same day as a zero-fee campaign on certain spot trades with bitcoin (BTC) came into force on Binance.
The increase in volume can be seen in charts for the BTC / USDT trading pair on the stock exchange. The chart also shows that the price closed for the day just around the $ 21,600 level – the same level as where it opened:
The sharp increase in trading volume was noticed by traders, and Changpeng Zhao later picked up the comments on Twitter, admitting that he “thinks this is due to zero fees and people trying to get VIP levels.”
Zhao promised to remove incentives for people to launder trade, such as the opportunity to earn elite status with the exchange for trading bitcoin without paying fees.
The move to eliminate such incentives was later confirmed by Binance, calling it necessary to “ensure a fair trading environment for all users after the launch of Zero-Fee Bitcoin Trading.”
Binance has nine different levels for users on its platform, with lower trading fees for those who trade higher volumes. A similar volume-based fee structure is used by most crypto exchanges.
And despite the fact that the introduction of free bitcoin trading presents some challenges, users seem to be happy with it anyway. When asked by the Binance chief if they “still want it”, 65.9% of respondents in a Twitter survey said “Yes.”
Wash trading is the term used when traders repeatedly buy and sell an asset to themselves. This is usually done to make the trading volume on an exchange or other platform look higher than it actually is.
Over the years, many crypto exchanges have been suspected of engaging in laundering in order to get their exchange higher up on various volume rankings. It has also been widely used on some exchanges that paid users tokens for trading.
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Learn more:
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